From Culbertson to Miles City, cities are being hit hard by the costs of oil development.
Sidney is expected to need $47 million in improvements to accommodate Bakken newcomers. Bainville, population 200, is expected to accommodate a 350-person man-camp because of a new frack-sand facility. In Culbertson, the sewer lagoons are at capacity.
Who pays for these infrastructure costs? Not the companies making the profits from the oil wells. The oil and gas companies escape almost all taxes on Montana’s Bakken wells for the first 18 months. They only pay a rate of 0.5 percent as compared to the regular tax rate of 9 percent. In 2011, this tax difference—or tax holiday—cost the state of Montana almost $50 million!
Montana’s tax holiday was enacted when oil prices were $11-$16 per barrel. Today, prices are $85-$105 per barrel. Does the oil industry really need a taxpayer subsidy these days?
By contrast, North Dakota attached a price trigger to their tax holiday to ensure their taxpayers weren’t subsidizing the oil industry when prices are high. As a result, North Dakota is in a far better position than Montana to pay for the costs that accompany large-scale development.
It’s time our legislature repealed this tax holiday in order to provide money to the impacted communities, where it is urgently needed. Montana cannot afford to give the oil and gas industry a free ride anymore.